- (1.) THIS is a petition under article 226 of the Constitution.
(2.) THE prayer contained in the petition is that notices under section 34 of the Income-tax Act in respect of the assessment years 1955-56, 1956-57 and 1957-58 may be quashed. THEre is a further prayer that proceedings in consequence of the said notices may also be quashed and the Income-tax Officer be prohibited for proceedings further in the matter. The material facts are that the petitioner is a partnership firm carrying on the business of ornamentation of glass bangles and of selling them. One Raj Nath was in the employment of the firm for two years ending October 18, 1952, as a salesman and as a Munim. He left the service of the firm with effect from that date and entered the employment of another concern, Messrs. Ganga Glass Works, Firozabad. Subsequently, Raj Nath carried on his own business. It is alleged that the business was of purchase of bangles in Firozabad and of sale of the same in Bangalore, Mysore and others States. The sale proceeds were collected by him and sent by bank drafts was deposited in his personal account in the Central Bank of India, Etmadpur and Tundla branches, with which the petitioner firm had no concern. Raj Nath carried on business at Mysore also prior to joining in Mysore but the petitioner firm had no concern with this Ram Saran Lal. In his business Raj Nath employed the services of Chandan Mal Kothari & Co., a banker firm of Firozabad, for discounting hundis drawn in favour of Raj Nath and the said banker maintained an account of the dealing of Raj Nath with which the petitioner firm had nothing to do, the account of the petitioner with Chandan Mal Kothari & Co. being an entirely distinct account. This Raj Nath was an assessee in his own name and in the assessment year 1954-55 he made a statement proceedings for that year in which he admitted the carrying on of a separate business and all other facts as stated above. His statement was recorded by the Income-tax Officer on May 11, 1960, and also on April 25, 1961. Assessments against Raj Nath for the years 1954-55 to 1959-60 were completed. So far as the petitioner firm was concerned, for the assessment years 1958-59 and 1959-60, regular assessment proceedings were pending before the same Income-tax Officer. So far as the years 1955-56, 1956-57 and 1957-58 were concerned they were sought to be reopened by notice under section 34 dated December 19, 1958. These notices are annexures to the petition and they state that they were being issued after obtaining the satisfaction of the Commissioner. It follows that the notices were under section 34(1)(a). In pursuance of these notices a letter was issued to the petitioner by the Income-tax Officer on December 4, 1959. By this letter it was intimated to the petitioner that the Income-tax Officer took the view that Raj Nath was connected with the petitioners business and in support of this view the Income-tax Officer catalogued the information in his possession in various paragraphs of the letter and asked the petitioner to rebut the said material and also to produce its accounts books. This letter was followed by the another letter dated April 17, 1961, in which the petitioner was required to produce all books of accounts and also Raj Nath, Banwari Lal, Daya Shankar and Shiam Sundar for examination by the Income-tax Officer. Meanwhile, the petitioner required the Income-tax Officer to communicate to it the reasons upon which the Commissioners sanction for proceedings under section 34 had been taken. As there is no provisions in the Act for the communication of such information, naturally, the Income-tax Officer paid no attention to this letter. Another letter dated September 12, 1960, was issued by the Income-tax Officer to the petitioner stating that the Income-tax Officer proposed to assess the amount of the drafts received in the name of Raj Nath as income belonging to the petitioner. Copy of this letter has not been annexed to the affidavit filed by the petitioner. The petitioner says that despite sending a full reply to the Income-tax Officers letters the Income-tax Officer did not desist from continuing the proceedings and hence the petitioner was compelled to file the writ petition. It has further been stated by the petitioner that Raj Nath was produced by him before the Income-tax Officer but the three other persons, namely, Banwari Lal, Daya Shankar and Shiam Sundar had left the petitioners service and as their addresses were not known the petitioner could not produce them before the Income-tax Officer. One other fact remains to be told and that is that on April 25, 1961, the Income-tax Officer completed the assessment of Raj Nath for the years 1954-55 to 1957-58.
(3.) UPON these facts the argument which has been addressed to me on behalf of the petitioner is that the Income-tax Officer, having completed the assessment of the alleged escaped income in the hands of Raj Nath, there was not jurisdiction left in him to proceed under section 34 in the respect of the same income against the petitioner for the three assessment years in question, namely, 1955-56, 1956-57 and 1957-58. Another minor submission which was made before me was that in the three notices which were issued to the petitioner for the said three years it was stated that "income assessable to income-tax for the year 31st March, 1955 (31st March, 1956), 31st March, 1957, has escaped assessment, etc." It was argued that this was clearly erroneous as the end of the relevant years would be 31st March, 1956 (31st March, 1957), 31st March, 1958. I am not satisfied that if there is any error in this respect it caused any prejudice to the petitioner or that the petitioner was in way misled by the same. I accordingly overrule this point.;